From BS today, Steve Keen argues that previous housing bull and long term interlocutor, Chris Joye, has capitulated to his bearish view:
…though house prices have not done what I expected, one of the most prominent commentators asserting that there is a dangerous house price bubble in Australia is… Chris Joye.
…Joye’s mantra all through our debates some years back was that changes in house prices merely reflected changes in disposable incomes…This argument…hasn’t held up well. Using ABS house price data and the Reserve Bank data on disposable income, in the period from 2008 till 2010 the correlation was plus 0.67…over the whole period from 2000 till today, the correlation is actually negative 0.12.
…My alternative model was that house prices followed changes in mortgage debt:
Ironically, it is Keen that now sees house prices moving higher.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
